BT’s recent surprise that their Italian subsidiary have been engaging in “inappropriate behaviour” – a reference to dodgy accounting treatment, not related to their Christmas party – is a timely reminder of the need for investors to remain vigilant.  BT’s lapse of control has cost them £500m in cash (despite the unit only making £100m profit) and a whopping £8bn wiped off the share price – ouch. 

It’s very easy for young, high growth companies to ignore accounting risk, deeming it to be something only relevant for mature businesses.  However, with the sector’s love of KPIs such as ARR, CAC, LTV - these stats can be open to a lot of interpretation.  Relying on auditors is generally not the answer, so remaining on top of trends and tying results back to real revenue and cash is more useful. We like to try to be part of the solution here by helping to hire great FCs and CFOs for our portfolio companies from the outset.